The over dependence on private sector for the reforms in power sector is not good for the country and the country needs a balanced approach. After more than two decades of power sector reforms in India it has failed to ensure adequate supply of electricity in the country, bring down AT&C losses, make the power sector vibrant, viable and profitable, bring in the benefits of competition in power generation and distribution by way of reduced tariff and better consumer services.

The very purpose of Electricity Act 2003 was to
reduce the losses in Power sector, improve the financial health of
the sector & reduce the subsidy burden of Government. But due to
faulty execution of policies the contrary has happened. The financial
health of power sector has further deteriorated & Government is
now even subsidizing private DISCOMS. What is more serious is that
due to continued wrong energy policies banking sector may collapse
under the burden of non-performing assets being generated by Power
Sector.

Electricity Act 2003 envisaged that with the setting
up of independent regulators and distancing of government from tariff
matters, the state distribution utilities would be able to achieve
financial viability and there by restore the financial health of the
power sector.

In
Focus

While state Discoms resorted to loans from the banks
and financial institutions to meet operational deficits, it has now
resulted in a position of debt trap for many of the state power
utilities.

While financial restructuring plan (FRP) is being
imposed on states which is forcing the states for introducing
privatisation for the reduction of AT&C losses through
introduction of input based distribution franchise. The government
has overlooked the cases of state sector Discoms of Andhra, Tamil
Nadu, Karnataka and Punjab where the AT&C losses were reduced
under public sector ownership. The government has also overlooked the
poor performance of private sector Discoms where the technical losses
remain high and the financial health has not improved.

New government should review power sector reforms
and make necessary amendments wherever needed. The practical model
adopted by Andhra Pradesh Eastern Discoms and Punjab have actually
achieved remarkable results in reduction of AT&C losses could be
considered and adopted by the other states having higher level of
AT&C losses as an alternative to the proposal of input based
distribution franchise or any other model of privatisation.

The concept of achieving low tariffs through
competitive bidding in Ultra Mega Power Projects (UMPP) has been
completely defeated by the changes made in terms of reference after
award of contract by giving various concessions to successful
bidders. Private sector companies have been successful in getting the
tariff revised from CERC despite signing of MOU’s with state
utilities for long term supply contracts on one pretext or other.

While the tariff policy of Government of India
stressed for setting up of new projects under competitive bidding,
several state governments have gone in for MOU route of cost plus
tariff for new projects which will result in higher tariff and
costlier power to the consumers. The new government must clearly lay
down the policy guidelines.

Government must ensure that no further amendments
are made in Electricity Act without the completion of review of power
sector reforms .It may be mentioned that Union Power Ministry has
proposed anew segment named 'supply license' in addition to existing
generation, transmission, distribution and trading licenses. The main
aim of this is to further develop power market rather than improving
the performance of the sector.

Autonomy & independence of Regulators has been
completely eroded as it has been captured by vested interests due to
interference by state governments even in tariff matters under the
clause of public interest. Most of regulatory commissions are headed
by retired bureaucrats who are enjoying all powers without any
responsibility.

The crisis being faced by Indian Power Sector
threatening to undermine the economic survival of the nation &
oppose those who are advocating the retrogressive energy policies
which are plunging the country into darkness.

There is over 20000 MW of stranded generating
capacity due to coal shortage. Coal India is not supplying full
quantity of coal to the thermal plants which have already been
completed. These plants are being asked to go for imported coal which
will increase generating cost for which there may be few buyers.

With the thrust on capacity addition in private
sector, several States are now in a condition of surplus power during
part or most of the year. This is resulting in a situation whereby
ate thermal power stations are ordered to be backed down or shut down
so as to enable these private sector thermal stations to operate at
optimum or full load

Gas power stations are lying idle due to costly
natural gas. Priority of allocation of gas to NTPC stations and state
gas power stations should be ensured at economical rates as a measure
to safeguard CPSU/ State Utility finances.

Central electricity Authority which played a major
role in power development of country has been completely sidelined.
Now there is no central agency to look after the coming of need based
generating station across the country. Now thermal plants are being
constructed without looking in to geographical needs of country.

There is an urgent need to place an alternate agenda
for the reforms in power sector by the new Government for power
sector development in the country to meet the national aspiration of
electricity for all at affordable cost.

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